COVID has young Australians setting sights on home ownership

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on January 11, 2021
COVID has young Australians setting sights on home ownership

Photo by Toa Heftiba on Unsplash

New research has revealed almost 45% of young people are more likely to want to purchase a home now.

A survey from Mortgage Choice found the pandemic has caused young people to shift focus to their financial goals, with many feeling more optimistic about home ownership. 

The survey found saving money was now the highest priority for young people, with over 60% reducing their spending to buy a home sooner. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
QLD/NSW/VIC/SA METRO & INNER REGIONAL AREAS
QLD/NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

  • $5000 Cashback. T&Cs Apply.
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of July 3, 2022. View disclaimer.

Additionally, almost 60% of respondents were adding more money to their savings account and over 40% were applying for government grants for first home buyers.

Susan Mitchell, Chief Executive Officer at Mortgage Choice, said COVID had given everyone a wake up call, which for young people meant evaluating their financial goals. 

“Despite the challenges of getting into the property market, young people are not giving up on the great Australian dream," Ms Mitchell said.

"In times of uncertainty, it is human nature to want stability, and this is what investing in property can provide.

“The fact that first home buyers can now access the most competitive home loan rates on record and unprecedented levels of government support such as grants and schemes provides compelling incentives to act on property ownership dreams.”

The survey found 85% of respondents had changed their saving and spending behaviour since the pandemic, with 70% planning to maintain these habits. 

Although keen on buying property, many young Australians found the process to be complicated.

Almost a third of first home buyers had minimal confidence in understanding and choosing home loan features, while 10% were not confident at all. 

'Rainy day' fund takes highest priority 

Over half of Australians said COVID had forced them to change their 2021 financial goals compared to previous years, a survey from ME Bank revealed.

Building up a 'rainy day' savings was the most listed financial goal and listed as the number one in terms of importance. 

Other popular goals included saving for a holiday, car, or other expense, saving enough to buy a property to live in, cutting back on expenses, and building wealth for retirement. 

According to the study, 66% of Australians said the pandemic had enlightened them as to the importance of having a 'rainy day' fund. 

ME’s General Manager Personal Banking Claudio Mazzarella said the survey was encouraging, given a recent ME Bank survey's findings that 21% of households had less than $1,000 in savings.

“In uncertain times it pays to focus on what you can control. Growing a stash of emergency money can be good for your bank balance – and your peace of mind," Ms Mazzarella said.

The biggest barriers in the way of Australians reaching their 2021 financial goals were reported to be ‘inadequate incomes’ (41%) ‘expenses’ (37%), and the ‘impact of COVID-19’ (28%).

Overall, the minority of respondents (29%) said they were ‘very likely’ to achieve their goals in 2021, indicating a general lack of confidence in attaining them.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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